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One of the most intriguing retirement studies issued in 2012 was by economists James Poterba of MIT, Steven Venti of Dartmouth, and David Wise of Harvard.* Their study looked at wealth holdings among Americans in their late 60s. And one of the findings that I found most striking is the married/single divide in retirement savings.

Here’s a table showing the distribution of financial savings of households age 65–69 in 2008. One line is for married couples; the second is for single-person households. (The researchers use the term single-person household intentionally; it includes individuals who are single throughout their lives as well as divorced and widowed individuals.)

The total figure here includes all retirement accounts (e.g., IRAs, 401(k)s) and all taxable savings and investment accounts (e.g., bank, brokerage, mutual fund). It doesn’t include Social Security, pensions, or housing wealth—so it’s not a complete snapshot of adequate retirement resources.

Financial savings of households with those aged 65–69 in 2008

Source: Poterba, Venti, and Wise (2012) Note: Includes all tax-deferred retirement accounts and all taxable savings and investment accounts.

Take a look at the median or 50th percentile is the midpoint—half of households are above the median and half below. The median married household has $111,600 in total savings. In contrast, the median single-person household has $12,500 in savings. That’s a huge difference, almost a factor of 10.

At the extremes, the top 30% of married households have savings of $332,400 or more; the top 30% of single-person households, $90,000 or more. Meanwhile, the bottom 30% of married households have less than $24,000 saved; the bottom 30% of single-person households, less than $800.

My guess is that if the entire distribution of American savings looked like the married couple numbers, we’d be having a very different conversation about Americans and their retirement saving ability. So what’s going on? What explains this sharp divide?

One possible explanation is divorce. When a couple separates, assets are divided, and savings can fall due to legal and other costs. If this were the main reason, we’d expect single-person figures to be just under half of those for married couples. But the gap is much wider.

Another explanation is being single throughout life. When you live alone, you don’t benefit from the economies of scale of sharing costs with another person in the household, and so you may save less over your lifetime for a given level of income. If you lose your job, you don’t have the self-insurance that comes from having another household member with income and health benefits.

Another likely culprit is early death of a spouse. You may be familiar with this situation in your own family. One spouse, often the working male, becomes sick in his 50s or early 60s, loses work, and then dies prematurely. The healthier spouse, often the female, may have a lower income or may not be working. She spends savings on living expenses and her husband’s medical costs. The loss of savings accelerates if they lose health insurance. Long-term care such as a nursing home can also accelerate the loss of assets. Medicaid, which can be used to pay for nursing care, doesn’t kick in until the household depletes most of its savings.

One lesson to draw from this data is that retirement security is more than accumulating savings. You need also to protect against large, unexpected claims. That means having disability, life, and health insurance. The new health care act may help when you lose workplace coverage—but of course you’ll still need to buy a policy. Another lesson to draw if you’re single is that you have to do more, in the form of higher savings, and perhaps insurance coverage, than your married counterparts.

In many studies of retirement preparedness, getting divorced, becoming a widow or widower, or being single are risk factors associated with being financially unprepared for retirement. This important study reminds us why—and also suggests how, as individuals, we might counteract some of these risks.

* Poterba, James M., Steven F. Venti, and David A. Wise, “The Composition and Draw-down of Wealth in Retirement.” National Bureau of Economic Research Working Paper 17536, www.nber.org, Table 2.

Notes: All investing is subject to risk, including possible loss of principal.

Steve Utkus

Steve Utkus oversees the Vanguard Center for Retirement Research, which studies many aspects of retirement in America—from how individuals start saving and investing in the early part of their careers, to how they prepare for actual retirement, to how they spend down their savings once they’re retired. Steve is particularly interested in behavioral finance—the study of how rational decision-making is influenced by human psychology. His current research interests also include the ways employers design retirement programs, and new developments in retirement in other countries. Steve holds a B.S. from the Massachusetts Institute of Technology and an M.B.A. from the University of Pennsylvania's Wharton School. He began working at Vanguard in 1987 and has served as director of the Center for Retirement Research since 2001. Steve is also a visiting scholar at the Wharton School.

Jim M. | April 6, 2014 7:16 pm

Guy N. | May 2, 2013 2:27 pm

For a more fair comparison, they should have divided the married numbers by 2 to get the “per person savings rate”. For example, the married per person savings at the 90th percentile is 439k as opposed to 380k for a single person.

Anyone who is married could become divorced, and singles could marry. If two average single 90th percentile people married, they’d have 720k in savings between them. That doesn’t seem quite as dramatic as comparing 380k to 878k.

Paul D. | April 23, 2013 4:42 pm

The U.S. tax system is not fair or balanced, never has been, and probably never will be. Married, single, rich, middle class, poor all are treated differently by the tax code. Unfortunately, there is nothing in the Constitution about equal or fair treatment as regards income taxes.

None of these particular classes of individuals has the lobbying power of special interest groups or companies. Until our elected officials decide differently, it will not change and this is why investment tax planning is very important…if you want to keep as much as possible of your retirement nest egg from the tax man.

Begonia B. | May 22, 2013 11:10 am

Paul D– My point is that the author of this article omitted a very significant issue and that omission is a flaw in his analysis. The subject matter is not as simple as he makes it. Mine is an important point. If I wanted to argue “fairness” I would have written a different comment.

Your comment is inappropriately dismissive. Moreover, it is not as if tax law cannot be reviewed and changed: that is what the discussion about Apple’s tax returns is about. Is you response to corporate tax issues that no one should care because no one will ever agree what is fair, so lets not do anything about it. Very strange.

Paul D. | July 17, 2013 2:29 pm

Begonia B. – my comments are not in response to your posting, sorry if you felt them to be so. I see nothing either inappropriate nor dismissive in my comments, which are all based on facts. The central tenant of my post is that investment tax planning is very important, regardless of ones marital status.

Bgonia B. | April 21, 2013 11:25 pm

People missing the point here–also I detect a lot of married smugness as well. Yet, you all know that our tax laws heavily favor married couples, so singles over a lifetime pay way more to Uncle Sam, I believe I have read an unmarried taxpayer pays on average over $100,000 more than his/her married counterpart (even while married couples earn more, save more and have economies of scale to begin with). The tax benefits for married couples is regressive in the extreme, and surprisingly it is not EVEN MENTIONED in the article!

EDWARD H. | April 18, 2013 9:13 am

The author fails to see the forest for the trees. Another explanation is that financially successful marriages stay together longer than financially struggling ones and being married long term is irrelevant to financial success, but a consequence instead. Money can’t buy happiness, but is sure increases the odds if it’s around…

Steve F. | May 2, 2013 3:40 pm

Jay R. | April 17, 2013 9:15 pm

I believe economies of scale play a large part in the differential where two people can live on less per person together than separately. This of course is further enhanced if both are wage earners as well. The fact that women earn less over a life-time is a point well-taken and I’m sure does affect this study as well as the economic disaster that is divorce. Also there is the life-style of single people which apparently results in poorer health outcomes or the poorer health may be why they are single. Finally, there is commitment required in maintaining a marriage which may indeed be concurrent with a commitment towards saving.

Anon N. | April 16, 2013 10:53 am

Concerned C. | April 16, 2013 5:07 am

These data show that half of single people in their later 60s have a bit of money in bank accounts. They may own a home and receive some Social Security.

These data do not reveal what I suspect is the case, namely that people with college degrees and a work history consisting of 35+ years of white collar work, retire quite well off regardless of marital status.

But the reasons why some people remain single in old age or lifelong are correlated with the reasons why some people are poor in old age or lifelong. Nowadays, the poor have poor marriage prospects. Poor health dissolves marriages as well as impair career prospects. Being single does not cause poverty or spendthriftness. Rather being poor or irresponsible tends to make one single.

The many divorced women who do not remarry tend to have limited means and to find it hard to save. Feminists may be correct when they argue that divorce tends to be financially disastrous for women, who tend to emerge from divorce with little more than a family home.

Mary P. | April 16, 2013 5:30 pm

I agree with “concerned.” There are very good studies showing the positive relationship between marriage and well-being of all sorts. Unfortunately, for those in the working (or non-working) class, marriage is increasingly rare. Changing mores have been okay for a lot of the college-educated, but disastrous for the others. We should re-think the easy come, easy go culture; it leaves the whole social network damaged, and not just financially.

Paul D. | April 17, 2013 10:00 am

Divorce is disastrous for all concerned, especially the children, who will be the next generation of the emotionally damaged working poor….and who will also probably repeat the mistakes of their parents by becoming divorced themselves.

It is true that the college educated tend not to get divorced at the same rate as the non college educated, but now that I am old and look back at the lives of many of my friends and acquaintances, I wonder if their higher education and perception of life in general led them to make family decisions based on financial terms rather than emotional issues?

I would also suggest that the non college educated blue collar union worker with 35+ years work history also usually retires quite well off regardless of marital history.

N D. | April 14, 2013 11:46 pm

Interesting data.

While a good marriage (which requires 2-earner and 2-parents; these are the most stable and healthiest for children), may be a much more solid financial enterprise than being single, I suspect it is cheaper to be single than to enter a bad marriage and get divorced.

This is why many women are not marrying; if the man is not willing to take half the responsibility for unpaid work of the family like child care, domestic chores (whether he does it himself or outsources it), it is cheaper not to marry. Ideally one does not have a child in these circumstances, but if she has one with a bad dad (not a good dad who does the aforementioned split), it is also healthier and sounder financially not marry him.

I suspect historically there has been a gender divide; older women are more likely to be in poverty (this is also because there are subsidies – funded and unfunded – to sole breadwinners in the tax code and Social Security and Medicare). But younger women, especially post Baby Boomer, have had some of the discriminations removed (although the tax and benefits code is still very dysfunctional in its subsidies to sole breadwinners). They can therefore do a healthy family if they find a good man, or not if they don’t, and end up better off than older women of previous generations.

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For more information about Vanguard funds, visit vanguard.com or call 877-662-7447 to obtain a prospectus or, if available, a summary prospectus. Investment objectives, risks, charges, expenses, and other important information about a fund are contained in the prospectus; read and consider it carefully before investing.

Vanguard ETF Shares are not redeemable with the issuing Fund other than in very large aggregations worth millions of dollars. Instead, investors must buy and sell Vanguard ETF Shares in the secondary market and hold those shares in a brokerage account. In doing so, the investor may incur brokerage commissions and may pay more than net asset value when buying and receive less than net asset value when selling.

Investments in bond funds are subject to interest rate, credit, and inflation risk.

Diversification does not ensure a profit or protect against a loss.

Investments in stocks or bonds issued by non-U.S. companies are subject to risks including country/regional risk and currency risk. Stocks of companies based in emerging markets are subject to national and regional political and economic risks and to the risk of currency fluctuations. These risks are especially high in emerging markets.

All investing is subject to risk, including the possible loss of the money you invest.